Editorial: Legal battle over app purchases

Published: Friday, July 25, 2014 at 07:40 PM.

The Federal Trade Commission launched a lawsuit against Amazon Inc. recently over an issue that didn’t exist 10 years ago — app purchases on smart devices.

Technology has moved swiftly since the iPhone was announced in 2007, and the governments of the world and even some technology companies have struggled to keep up. This amazing leap forward in technology was followed by a leap in the American business community and a new segment of the economy. Call it the app economy. All of these phones and tablets are now filled with applications. Some of them are educational, some allow us to communicate and some allow us to play games. What app developers found was that while it was difficult to get people to pay for a game up front it was easy to allow them to download a game for free and then sell virtual goods to the players.

Players could use real money to buy weapons for their virtual warriors and dozens of other virtual goods. While most of these games could be played without spending any money, the developers did everything they could to make their games easier and more fun for the players who spent a little cash.

What the FTC argues, though, is that children were spending their parent’s money on virtual goods without their parent’s knowledge or consent. The commission also claimed that Amazon made it difficult for parents to get a refund when they discovered that their real tyke had spent real money (in some cases hundreds of dollars) on virtually nothing.

In a written defense authored by Amazon’s general counsel, the tech giant correctly notes that the app economy is a new and rapidly evolving area and that Amazon has worked to improve parental controls in its devices. So, even before the government got involved, the retailer recognized there was an issue and began to come up with a solution.

The FTC apparently demanded a similar capitulation from Amazon but the company wouldn’t back down. We wonder if the FTC has been a bit too zealous in this area. The free market is an interesting thing, and it seems like Amazon was already working on a solution.

The market is full of competitors. If a parent were charged an exorbitant sum by mistake and then found that they were unable to get a refund, would they then go back to the same company for their next device? Would you?

The Federal Trade Commission launched a lawsuit against Amazon Inc. recently over an issue that didn’t exist 10 years ago — app purchases on smart devices.

Technology has moved swiftly since the iPhone was announced in 2007, and the governments of the world and even some technology companies have struggled to keep up. This amazing leap forward in technology was followed by a leap in the American business community and a new segment of the economy. Call it the app economy. All of these phones and tablets are now filled with applications. Some of them are educational, some allow us to communicate and some allow us to play games. What app developers found was that while it was difficult to get people to pay for a game up front it was easy to allow them to download a game for free and then sell virtual goods to the players.

Players could use real money to buy weapons for their virtual warriors and dozens of other virtual goods. While most of these games could be played without spending any money, the developers did everything they could to make their games easier and more fun for the players who spent a little cash.

What the FTC argues, though, is that children were spending their parent’s money on virtual goods without their parent’s knowledge or consent. The commission also claimed that Amazon made it difficult for parents to get a refund when they discovered that their real tyke had spent real money (in some cases hundreds of dollars) on virtually nothing.

In a written defense authored by Amazon’s general counsel, the tech giant correctly notes that the app economy is a new and rapidly evolving area and that Amazon has worked to improve parental controls in its devices. So, even before the government got involved, the retailer recognized there was an issue and began to come up with a solution.

The FTC apparently demanded a similar capitulation from Amazon but the company wouldn’t back down. We wonder if the FTC has been a bit too zealous in this area. The free market is an interesting thing, and it seems like Amazon was already working on a solution.

The market is full of competitors. If a parent were charged an exorbitant sum by mistake and then found that they were unable to get a refund, would they then go back to the same company for their next device? Would you?

This country is full of busy parents and the ultimate responsibility for what their children do both in the real and virtual worlds falls not to the government, nor to Amazon, but to them. That may be an expensive education but we’re betting it’s the kind of thing that won’t require a second lesson.

A version of this editorial first appeared in the The News-Herald of Panama City, Fla., a Halifax Media Group newspaper.